Georgia, like many states, is in the process of restructuring its publicly supported long term care system. The key principle guiding this reform effort is that the state should integrate the delivery systems providing medical and long term care. The Department of Medical Assistance (DMA), the state Medicaid agency, is experimenting with integration through a pilot health plan, SOURCE (Service Options Using Resources in Community Environments). The plan is designed for people who are both Medicaid and Medicare eligible (dually eligible) and who, based on medical, cognitive, and functional criteria, are either nursing home eligible or at-risk of nursing home placement. Enrollees (n=2208) will be case managed by a multi-disciplinary team; will receive medical services from a closed panel of physicians; and be provided home and community-based services (HCBS) under a prescribed care plan. The state's 1915-C waiver program provides the same HCBS package, offered via SOURCE without the accompanying medical services, to Medicaid recipients who are nursing home eligible. Establishing SOURCE thus creates a setting where the effects of a model of integration can be explored via a matched case control study. This application proposes to use RO3 finds for two specific aims. The first is to compare the health outcomes and costs of the SOURCE population with those for a matched control population from the 191 5-C waiver program. The hypotheses to be tested are that integration, as defined by SOURCE, produces lower average costs per client and better health outcomes than under the current (non-integrated) system. The second is to analyze collected data by gender, ethnicity, and primary medical condition to investigate if integration impacts groups differently. The preliminary hypotheses to be tested are that health improvements associated with SOURCE enrollment will be relatively greater for African Americans than for whites, for women than for men; and for those with primarily functional as opposed to medical problems. The findings here will form the basis of a future ROl submission around the mechanisms by which system changes affect the health outcomes of frail, dually eligible elderly and on the differential effects of integration among groups of elderly.